Beacon Commerce Blog

Amazon return policy 101: What Amazon Sellers need to know

Mar 17, 2023

Customers love buying on Amazon for many reasons, including Amazon’s convenient return policy.

Hassle-free returns are definitely great for your customers! However, as an Amazon seller, you need to understand the impact of these return policies on your profitability

This is particularly the case for FBA (Fulfillment by Amazon) sellers who rely on Amazon’s fulfillment network to store, pack, and ship their products. In this article, we will discuss how Amazon’s return policies impact FBA seller profitability. We’ll also discuss what happens to the return when it arrives at an Amazon warehouse and best practices for dealing with those returns.

Amazon returns: timelines, process and costs

Firstly, Amazon’s return policy provides customers with a 30-day window to return an item for any reason, regardless of whether it is defective or not. During the holidays, this return window increases to 60 days.

That means you need to plan your cash flow accordingly!  If you are an FBA seller, Amazon handles the return process on your behalf. Amazon will deduct the cost of return shipping from your account balance. The return shipping cost can vary depending on the size and weight of the item. Typically the cost ranges from $2.50 to $20 per item.

When a customer initiates a return, the item is shipped back to the nearest Amazon warehouse. At the warehouse, the item undergoes an inspection process. This inspection process can take up to two weeks. Amazon will evaluate the item for any damage or signs of wear and tear. If the item is in a resellable condition, Amazon returns it your inventory and it goes back up for sale again.

Be aware, however, that if your account is set up for auto disposal, Amazon may just throw the item out. (More on that point below.)

Amazon return disposal fees

If the returned item is not in resellable condition, FBA sellers may incur additional fees. These are known as disposal fees. Amazon charges disposal fees when the item cannot be returned to your inventory and Amazon must dispose of it. These fees vary depending on the item’s size and weight, but they can range from $0.15 to $0.30 per unit. 

Avoid auto-disposal for Amazon returns

We highly recommend you select the disposal option on your account that requires Amazon to ship the item back to you for the same price (NOT auto-disposal). This is important because it allows you to evaluate the condition of the item for yourself. 

Sometimes customers don’t actually return the right product. They might return a product that’s missing some of the components. So check out that return.

You are eligible for a full refund if a customer does not return the right product, or parts are missing. It does happen! Take pictures of the condition of the return. Then you can try to get your money back from Amazon.

Amazon’s return policies have seriously affect your profitability as an FBA seller, particularly if you receive a high volume of returns.

For example, let’s say you have 1,000 units of a product in your inventory. If customers return 100 of those units within 30 days, you will incur return shipping costs of up to $2,000 ($20 x 100 returns).

If Amazon deems 20 of those units unsellable and disposes of them, you will incur additional disposal fees of up to $60. You’d have a $2,060 loss in revenue! And that doesn’t include the cost of restocking the returned items.  

What about Amazon multi-channel fulfillment returns?

Are you using Amazon multi-channel fulfillment (MCF) to ship your products to customers?

In that case, Amazon’s involvement ends when the product is shipped to the customer. Amazon will not accept the return.

You’ll need to develop your own return authorization process and standard operating procedures (SOPs). For example, you could allow the customer to return the product to your warehouse, or perhaps even your house or a P.O. box.

4 best practices to limit Amazon returns

Here are four best practices to reduce a hit to your profitability from returns:

  1. Provide excellent customer service – Address all customer concerns promptly and professionally to reduce the likelihood of customers returning items. Even if a customer does return an item, a respectful tone and quick response can earn you repeat business — and better Amazon reviews and higher ratings in future. Also see our best practices for using Amazon Message Center to communicate with customers.
  2. Address any product or process issues – Monitor and regularly review return data to understand WHY customers are returning products in the first place. Improve product quality or processing issues to avoid more returns in future.
  3. Inspect returned items – As an FBA seller, you can request that Amazon provide you with a detailed inspection report for each returned item. This report can provide insight into the reason for the return and help you identify any potential issues with the product. As noted above, if a product is slated for disposal, we recommend you choose the option to have Amazon ship back to you so you can evaluate the condition for yourself.
  4. Consider repricing – If high pricing leads to an item return, FBA sellers can consider repricing the product to be more competitive.

Amazon’s return policies can have a significant impact on your bottom line as an FBA seller.

Review your data and identify trends for continuous improvement and customer satisfaction. Ensure you are fully accounting for all costs of selling on Amazon. Ultimately, your goal as an FBA seller is to reduce the impact of returns on your profitability as your Amazon business grows.

Having trouble getting reimbursed for returns on Amazon? Tired of dealing with Amazon complexity? Ask us about full account management services and say goodbye to all the hassles. Start with a FREE Amazon opportunity forecast:

Thank you for your interest!

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